Science & Technology
Science and Technology
Science and Technology
Mon, November 30, 2009
Fri, November 27, 2009 Lightscape Technologies Reports Fiscal 2010 Second Quarter Results
HONG KONG--(Marketwire - November 27, 2009) - Lightscape Technologies Inc. (
Total net revenue from continuing operations for the three months ended September 30, 2009 was $1.27 million, a 350% increase from $0.28 million for the three months ended September 30, 2008. Overall gross profit margin was 26% for the three months ended September 30, 2009, with a gross margin in the digital OOH advertising business of 79%.
Net loss from continuing operations for the three months ended September 2009 was $0.61 million, or $0.01 per fully diluted share, compared to a net loss of $0.44 million, or $0.01 per fully diluted share, for the three months ended September 30, 2008.
At the end of the quarter, Lightscape's OOH network totaled over 35 LED billboards and more than 300 LCD screens across 27 cities in Greater China and Hong Kong with utilization rates continuing to grow steadily. Current paying advertising clients include global financial service providers, leading consumer electronics manufacturers, high-end Chinese fashion brands and site-specific local restaurants and building tenants.
During the second quarter, the Company's lighting source products business, Beijing Aihua New Enterprise Lighting Appliance Co. Limited ("Aihua"), was classified as held for sale and discontinued. Over the past two fiscal years, Aihua accounted for $5,427,619 in net losses for Lightscape. Additionally, a non-core subsidiary in the LED solutions business was sold. The discontinuation of these businesses resulted in a non-cash net loss from discontinued operations for the three months ended September 2009 of $7.86 million, or $0.14 per fully diluted share.
Bondy Tan, President and CEO of Lightscape, said, "We decided to exit the lighting source products business by holding for sale our subsidiary company Aihua during the second quarter. Our decision to discontinue operations in this business segment is intended to more effectively utilize our financial and human resources by focusing on our core LED out-of-home advertising and LED solutions businesses which we consider to have more promising potential for revenue and margin growth. Subsequent to the end of our second quarter, we signed an agreement for the sale of this unit at a price of $1,140,751. It is expected that the sale of Aihua will considerably reduce our operational and non-operational expenses in the future, resulting in significant improvements in our operating results."
Continued Mr. Tan, "During the second quarter, we also continued to focus on opportunities in our core digital OOH advertising business. After the work we completed during calendar year 2008 and into 2009 to build up our digital OOH advertising network, we continued to grow our revenue from this segment during the second quarter. We see excellent opportunities for growth in this business and we will continue to build and expand the company's OOH advertising network through partnerships with major property owners and developers and by forming strategic relationships with advertising agencies."
Business Highlights
-- Lightscape continues to focus on its exclusive OOH advertising relationship with New World Group to ramp-up the network of locations at New World Department Stores China properties throughout Mainland China -- booked $260,026 of advertising revenue generated by digital OOH advertising network, achieving a gross profit margin of 79% -- Lightscape signed an agreement for the sale of its non-core lighting source products business for $1.14 million subsequent to the second quarter in order to free up capital and resources to grow its digital OOH advertising business
Results of Operations
Total net revenue from continuing operations for the three months ended September 30, 2009 was $1,270,340, representing a 350% increase from the total net revenue of $282,424 for the three months ended September 30, 2008. The increase in net revenues is attributable to increased sales across both the digital OOH advertising business and the LED solutions business.
Specifically, revenue related to the digital OOH advertising business was $260,026 for the three months ended September 30, 2009 as compared to $nil during the three months ended September 30, 2008, and a 38% increase over $188,625 for the Company's last quarter ending June 30, 2009. The gross profit margin on the digital OOH advertising business was 79% for the three months ended September 30, 2009. The digital OOH advertising business is expected to contribute increased revenues in the foreseeable future as the Company ramps up several key network installations which were completed during past quarters and are expected to generate increased advertising revenue in the future. The Company has formed strategic partnerships with Ogilvy & Mather Group, a major advertising agency in Hong Kong, and LIME, a diversified media conglomerate, to sell advertising space on its digital OOH network. The Company is also in the process of negotiating strategic partnership agreements and contracts with other advertising agencies and additional advertisers for the sales of advertising space on the network.
Revenue related to the Company's LED solutions business increased by 273% to $1,010,314 for the three months ended September 30, 2009 from $270,709 during the three months ended September 30, 2008. The increase in revenues was due primarily to the completion of more LED solutions contracts during the three months ended September 30, 2009 as compared to a smaller number of contracts completed during the three months ended September 30, 2008, and the acceleration of certain major contracts towards technical completion. The gross profit margin on the LED solutions business was 12% for the three months ended September 30, 2009. The LED solutions business is expected to contribute increased revenues in the foreseeable future as several key projects are expected to be completed in the near future.
Total cost of revenues from continuing operations for the three months ended September 30, 2009 was $942,706, which represents an increase of 457% as compared to total cost of revenues of $169,235 for the three months ended September 30, 2008. The increase in the total cost of revenues from continuing operations during the three months ended September 30, 2009 was due primarily to the corresponding 350% increase in overall sales revenues. The overall gross profit margin was 26% for the three months ended September 30, 2009 as compared to 40% for the three months ended September 30, 2008, with the decrease due mainly to lower gross margins from the LED solutions business.
Operating expenses from continuing operations for the three months ended September 30, 2009 were $890,668, which represents a 16% increase in operating expenses from $769,467 for the three months ended September 30, 2008. Selling and marketing expenses, general and administrative expenses constitute the main components of the Company's operating expenses. Earlier in 2009, the Company introduced internal measures to control costs, including salary reduction for management.
Selling and marketing expenses of continuing operations for the three months ended September 30, 2009 increased approximately 308% to $143,376 from $35,159 for the three months ended September 30, 2008. The increase corresponds to the 350% increase in total net revenues and was mainly due to increased costs incurred in order to build up the sales network for the digital OOH advertising business, and to build up the Company's project pipeline of LED solutions contracts. The Company anticipates that selling and marketing expenses will remain steady or increase in the future to support the Company's further expansion in its core digital OOH advertising and LED solutions businesses, however, any such increases are expected to be limited as a result of a company-wide cost-cutting initiative implemented throughout 2009.
General and administrative expenses of continuing operations decreased by 3% during the three months ended September 30, 2009 to $631,840 from $653,773 for the three months ended September 30, 2008. The decrease was mainly due to the cost savings achieved as a result of the company-wide cost-cutting initiative implemented throughout 2009. The Company anticipates that general and administrative costs will remain steady or increase in the foreseeable future as the Company's operations continue to expand, however, such increases are expected to be limited as a result of the cost-cutting initiative.
As of September 30, 2009, the Company had a net working capital surplus from continuing operations of $1,751,070 compared to a surplus of $2,684,131 as of March 31, 2009, representing a decrease in working capital of $933,061. The cash and cash equivalents of the Company attributable to continuing operations decreased to $224,042 as at September 30, 2009 as compared to $342,729 as of March 31, 2009. Cash attributable to discontinued operations totaled $127,780 as of September 30, 2009 and $47,470 as of March 31, 2009.
Lightscape incurred capital expenditures of $430,733 during the six months ended September 30, 2009 and $7,406 for the six months ended September 30, 2008. The increase in capital expenditures for the six months ended September 30, 2009 as compared to September 30, 2008 was mainly attributable to increased purchases of digital OOH advertising equipment.
Financing activities of continuing operations generated cash of $619,849 for the six months ended September 30, 2009 as compared to financing activities generating cash of $952,726 for the six months ended September 30, 2008. The decrease in net cash flow generated by financing activities of continuing operations was mainly due to the repayment of bank loans during the six months ended September 30, 2009 as compared to six months ended September 30, 2008.
Additional information regarding Lightscape's financial performance for the three and six months ending September 30, 2009 and a comparison to the periods ended September 30, 2008, can be found in the financial tables below and in the Company's Quarterly Report on Form 10-Q, which has been filed with the Securities and Exchange Commission.
About Lightscape Technologies
Lightscape Technologies Inc. (
Cautionary Disclaimer -- Forward-Looking Statements
This news release contains "forward-looking statements," as that term is defined in Section 27A of the United States Securities Act of 1933, as amended, and Section 21E of the United States Securities Exchange Act of 1934, as amended. Such forward-looking statements include, among others, the estimation, expectation and/or claim, as applicable, that: Lightscape expects to close the sale transaction of subsidiary company Aihua; Lightscape expects that the sale of Aihua will considerably reduce operational and non-operational expenses in the future, resulting in significant improvement in operating results; Lightscape expects an MOU agreement signed with New World Department Stores China to enable the Company to expand its digital OOH advertising network at properties throughout China; Lightscape expects its digital OOH advertising business to contribute increased revenues in the foreseeable future as the Company ramps up several key network installations which were completed during past quarters and are expected to generate increased advertising revenue in the future; Lightscape expects Ogilvy & Mather and LIME to sell advertising space on its digital OOH advertising network; Lightscape expects its LED solutions business to contribute increased revenues in the foreseeable future as several key projects are expected to be completed in the near future; and Lightscape anticipates that selling, marketing, general and administrative expenses will remain steady or increase in the future to support the Company's further expansion in its core digital OOH advertising and LED solutions businesses, but such increases are expected to be limited as a result of a company-wide cost-cutting initiative implemented in January 2009. Actual results could differ from those projected in any forward-looking statements due to a variety of risks, uncertainties and other factors, including, but not limited to, delays in the supply of LED modules, LED video screens and other hardware; risks of downturns in economic conditions generally and in Hong Kong and China specifically; competition with larger companies with greater resources and more experience in providing digital OOH advertising services and LED solutions; the availability of timely financing; and the Company's ability to manage growth. These forward-looking statements are made as of the date of this news release and the Company assumes no obligation to update the forward-looking statements, or to update the reasons why actual results could differ from those projected in the forward-looking statements. Although the Company believes that the beliefs, plans, expectations and intentions contained in this press release are reasonable, there can be no assurance those beliefs, plans, expectations, or intentions will prove to be accurate. Investors should consider all of the information set forth herein and should also refer to the risk factors disclosed in the Company's periodic reports filed from time-to-time with the Securities and Exchange Commission and available at [ www.sec.gov ].
(financial tables to follow)
LIGHTSCAPE TECHNOLOGIES INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (UNAUDITED) Expressed in US dollars (except for number of common shares) Three Months Ended Six Months Ended September 30, September 30, 2009 2008 2009 2008 ---------- ---------- ---------- ---------- $ $ $ $ ---------- ---------- ---------- ---------- Revenues: Advertising revenue 260,026 - 448,651 - LED solutions revenue 1,010,314 270,709 1,784,319 923,658 Other revenue - 11,715 - 22,667 ---------- ---------- ---------- ---------- Total net revenues 1,270,340 282,424 2,232,970 946,325 ---------- ---------- ---------- ---------- Cost of revenues: Cost of sales of Advertising revenue (i) 53,884 - 93,156 - Cost of sales of LED solutions revenue 888,822 169,046 1,529,470 676,681 Costs of Other revenue - 189 - 378 ---------- ---------- ---------- ---------- Total cost of revenues 942,706 169,235 1,622,626 677,059 ---------- ---------- ---------- ---------- Gross profit 327,634 113,189 610,344 269,266 Bad debts (36,584) - (36,584) - Amortization (38,219) (53,855) (76,438) (125,546) Depreciation (40,110) (26,680) (79,645) (62,690) Loss on disposal of property, plant and equipment (539) - (539) - Selling and marketing expenses (143,376) (35,159) (310,521) (97,885) General and administrative expenses (631,840) (653,773) (1,349,094) (1,459,972) ---------- ---------- ---------- ---------- Loss from operations (563,034) (656,278) (1,242,477) (1,476,827) Interest expense, net of interest income (48,123) (6,902) (47,964) (6,953) Other income 4,217 13,645 23,332 13,645 ---------- ---------- ---------- ---------- Loss from continuing operations before income tax and noncontrolling interests (606,940) (649,535) (1,267,109) (1,470,135) Income tax provision - 206,977 - 206,977 ---------- ---------- ---------- ---------- Net loss from continuing operations before noncontrolling interests (606,940) (442,558) (1,267,109) (1,263,158) Less: net income attributable to the noncontrolling interests - - - - ---------- ---------- ---------- ---------- Net loss from continuing operations attributable to Lightscape Technologies Inc. (606,940) (442,558) (1,267,109) (1,263,158) ---------- ---------- ---------- ---------- Discontinued operations Net (loss) from discontinued operations, net of income taxes (116,658) (296,773) (210,922) (470,034) Gain on disposal of discontinued component 54,172 - 54,172 - Impairment loss on subsidiary held for sale (8,835,266) - (8,835,266) - Noncontrolling interest share of related impairment loss 1,042,496 1,042,496 ---------- ---------- ---------- ---------- Net (loss) from discontinued operations (7,855,256) (296,773) (7,949,520) (470,034) ---------- ---------- ---------- ---------- Net loss attributable to Lightscape Technologies Inc. (8,462,196) (739,331) (9,216,629) (1,733,192) Other comprehensive income Foreign currency translation adjustment arising during the period (36,257) (33,374) 1,789 119,920 ---------- ---------- ---------- ---------- Comprehensive loss (8,498,453) (772,705) (9,214,840) (1,613,272) ========== ========== ========== ========== Loss per share Basic and diluted Continuing operations (0.01) (0.01) (0.02) (0.02) Discontinued operations (0.14) - (0.14) (0.01) ---------- ---------- ---------- ---------- Total (0.15) (0.01) (0.16) (0.03) ========== ========== ========== ========== Weighted average number of common shares outstanding Basic and diluted 55,876,410 55,876,410 55,876,410 55,876,410 ========== ========== ========== ========== (i) Includes depreciation of plant and equipment of $53,884 and $93,156 for the three months ended September 30, 2009 and 2008, respectively, and $Nil and $Nil for the six months ended September 30, 2009 and 2008, respectively. LIGHTSCAPE TECHNOLOGIES INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS Expressed in US dollars September 30, March 31, 2009 2009 (Unaudited) ----------- ----------- $ $ ----------- ----------- ASSETS Current assets: Cash and cash equivalents 224,042 342,729 Accounts receivable, net of allowance for doubtful accounts of $561,254 on September 30, 2009 and $415,383 on March 31, 2009 1,695,800 1,213,334 Costs and estimated earnings in excess of billings on uncompleted contracts 428,044 673,312 Prepaid expenses and other current assets 1,966,740 1,041,616 Inventories - LED 1,264,975 1,264,975 Inventories - others, including valuation allowance of $162,801 on September 30, 2009 and $162,782 on March 31, 2009 - - Current assets of discontinued operations 3,205,952 12,435,386 ----------- ----------- Total current assets 8,785,553 16,971,352 ----------- ----------- Intangible assets, net 6,615 82,431 Goodwill 776,378 776,378 Plant and equipment, net 345,499 279,738 Out-of-home advertising equipment, net 1,985,000 1,824,421 Construction in progress - Out-of-home advertising equipment 266,250 266,250 Deferred cost 104,404 111,132 Accounts receivable, due after one year and net of allowance for doubtful accounts of $Nil on September 30, 2009 and $145,871 on March 31, 2009 - 200,889 Prepaid expenses and other current assets - due after one year - 8,612 Net investment in sales-type leases of discontinued operations 20,438 36,359 ----------- ----------- 3,504,584 3,586,210 ----------- ----------- TOTAL ASSETS 12,290,137 20,557,562 =========== =========== LIABILITIES AND SHAREHOLDERS’ EQUITY Current liabilities: Short-term bank borrowings 456,694 - Secured loan 257,069 - Trade payables 877,560 358,939 Amount due to a director 592,589 745,501 Accrued expenses and other current liabilities 1,632,821 747,395 Obligations under capital leases - current portion 11,799 - Income tax payable - - Current liabilities of discontinued operations 1,200,549 1,170,508 ----------- ----------- Total current liabilities 5,029,081 3,022,343 ----------- ----------- Non-current liabilities: Obligations under capital leases - non-current portion 47,199 - ----------- ----------- Total non-current liabilities 47,199 - ----------- ----------- Total liabilities 5,076,280 3,022,343 ----------- ----------- Shareholders’ equity: Common stock Authorized: 800,000,000 common shares, par value $0.001 per share 100,000,000 preferred shares, par value $0.001 per share Issued and outstanding: 55,876,410 common shares at September 30, 2009 and at March 31, 2009 55,876 55,876 Additional paid-in capital 34,140,708 34,140,708 Common stock warrants 344,673 344,673 Other reserves 28,944 28,944 Accumulated other comprehensive income 1,079,143 1,077,353 Accumulated deficit (28,435,851) (19,219,220) ----------- ----------- Total shareholders’ equity 7,213,493 16,428,335 ----------- ----------- Noncontrolling interest 364 1,106,884 ----------- ----------- Total Equity 7,213,857 17,535,219 ----------- ----------- TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY 12,290,137 20,557,562 =========== ===========
